You wanted to renovate the living room for the coming family reunion – you have no cash, however. Why not apply for guaranteed loans? Through the help of a second person, you can get approved, especially if that individual is someone with good credit standing. But should you always seek the support of other people for your own loan? Improve your credit score so you can apply on your own next time. Here are some tips:
Review your credit report for possible errors
You are sure that your credit score is low because you are not able to keep up with your monthly payments, leading you to inquire about guaranteed loans. However, you did not make an effort to do an actual check of your credit report thus you are not aware of the exact score. What if there are errors? Federal Trade Commission reported that an estimate of 5% of consumers have spotted inaccuracies on their credit reports.
If yours have one, it brought significant effect on your credit rating thus you will have the chance to increase your score. Visit FreeCreditReport.com as it offers free credit report from primary reporting agencies once a year. If indeed there are errors, have it corrected immediately.
Consolidate and then eliminate (or reduce) your credit card balances
One way to boost your credit rating is to consolidate then reduce your credit card debts. If you have three or more credit cards, pay off the balances of all of them except for one or two. Having debts on all your cards affect your score because your credit report is polluted with balances. However, do not close the other cards that you already have as these will also negatively affect your score.
In case you have no funds to do these, you can ask one of your family members or a friend to lend you the amount that you need. Yes, in reality, this method does not decrease the amount of money you owe, but it’s a trick to improve your credit score as the debt you borrow from your family or friend will not be reflected on the credit report. At the same time, the credit card balance is already gone thereby giving you a chance to have a better score.
Pay your bills on time
Now, it’s time to change your purchasing habits. Strictly monitor your purchases and make sure that you can pay them each month. Never default in your payment as this will ruin all your efforts. Buy only what you need – not what you want – until the time you are able to free yourself from debts. Keep track of the amount of money that you can spend each month; never go overboard.
Avoid maxing out the limit of your card
If you have two cards, use them alternately, but keep the balance of both below 30% of the credit limit as it can help you maintain or increase your rating. It’s not a good idea to use just one card and use over 30% of the limit.